U.S. Seeing Historic 1-Year Drop in Gas Prices

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The U.S. is witnessing a historic drop in the price of gas at the pump due to the war in Ukraine, according to an industry analyst.

AAA had the price per gallon dropping from $4.48 a gallon a year ago to $3.53 as of May 16.

Patrick De Haan, an energy analysis with GasBuddy, said on Twitter there have only been only four times in history, including now, when the U.S. experienced such a dramatic drop in gas prices.

He said the other times were the 2008-2009 recession ($3.04 Jan. 2008 to $1.79 Jan. 2009); when OPEC increased its production of oil in 2015 ($3.31 Jan. 2014 to $2.12 Jan. 2015); during the COVID pandemic in 2020 ($2.86 May 2019 to $1.87 May 2020). Gas prices listed are from the U.S. Energy Information Administration.

De Haan posted on Twitter: " ... the entire reason for the $1/gal drop is basically the worst fears after Russia's invasion didn't play out, plus economic headwinds limiting consumption."

Andrew Gross, energy analyst for AAA, said the oil market took an "overly negative" view of how the war would impact the oil market and that's why gas prices were so high a year ago.

"Now, they are, 'Oh. Wait. Russian oil is still getting out,'" Gross said.

The trend of lower gas prices should continue, barring unforeseen circumstances, De Haan told The Center Square.

"That's typical for summer," he said. "A peak in price before the summer starts due to the transition to summer gasoline and refinery maintenance, but once the transition is done and refineries are back, supply builds and prices ease."

The next challenge will be the hurricane season, which starts in the middle of June and lasts until the end of September. Gross said that could have a big impact on the cost of gas going forward.

We thank The Center Square for reprint permission.

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